Speakers Welcome Efforts towards Energy Efficiency, Cost Savings, Sustainability, as Fifth Committee Reviews Status of Construction, Renovation Projects
Delegates in the Fifth Committee (Administrative and Budgetary) today backed the ongoing multi-faceted construction and renovation projects at the Economic and Social Commission for Asia and the Pacific (ESCAP), the Economic Commission for Latin America and the Caribbean (ECLAC) and the United Nations Office at Nairobi, lauding efforts toward energy efficiency, cost savings and sustainability. They also emphasized the need for the projects to be kept tightly on schedule.
Singapore’s representative, speaking on behalf of the Association of Southeast Asian Nations (ASEAN), expressed pleasure that ESCAP, the UN’s largest intergovernmental platform in Asia and the Pacific which plays a key role in promoting sustainable development in the region, will fare well in its goal of reducing energy consumption by 16 to 18 per cent through energy-saving and energy-efficient design features that are part of the seismic mitigation retrofit and life-cycle replacements project underway. He particularly highlighted the imperatives of including local knowledge, indigenously fabricated materials, technology and capacity in construction projects. “ESCAP’s seismic mitigation project is a long-term investment with safety and security as the ultimate goal,” he said, also encouraging the Commission to keep finding innovative ways to realize budgetary savings, manage operational risks and ensure business continuity.
The delegate for Thailand, the host country, echoed this sentiment, underscoring the importance of ESCAP to the region’s economic and social development, particularly on the journey towards implementing the Sustainable Development Goals. He described the seismic mitigation project as a story of resilience and innovation, and said its best practices — including on project management during a pandemic, awareness to accessibility, reduced environmental impact and cost savings though joint procurement with the Economic Commission for Africa (ECA) — should be shared with other similar UN projects.
Turning to the renovation of ECLAC’s North Building, Chile’s delegate — also speaking for Argentina, Bolivia, Brazil, Colombia, Costa Rica, Cuba, Ecuador, El Salvador, Guatemala, Guyana, Honduras, Mexico, Panama, Paraguay, Peru, Dominican Republic, Uruguay and Venezuela — said in-kind contributions from his Government have been critical to ECLAC’s goal of becoming a net-zero energy facility. Optimistic about the project’s completion on schedule, he warned against tampering with the scope of the project in any of its critical components — as doing so would impair its functionality, impact its net-zero and sustainability goals and could eventually increase operating costs. He expressed support for the revised overall $19.17 million cost of the project.
Towing a similar path, his Cuban counterpart, speaking for the Group of 77 and China, concurred with the explanation that factors such as a significant price increment for materials in the project’s scope and a 530 per cent increase in freight rates from 2019 to 2022 accounted for the $4.9 million increase to the project’s estimated maximum cost. He underlined the importance of effective governance, oversight, internal control and accountability for the project to be implemented within the proposed revised budget and the established timeline.
On the replacement of office blocks A-J at the UN Office in Nairobi, the representative of Ethiopia, speaking for the African Group, said successful implementation of the project — which remains on track for completion by the end of 2025 — is vital to create a conducive work environment and enhance productivity. Effective governance, oversight and accountability mechanisms are critical to this becoming a reality. She commended the project’s management team and the Global Asset Management Policy Service for efforts that increased the confidence level on risk management to 97 per cent. She resonated with her colleagues in also calling for local labour and expertise as well as locally sourced and manufactured materials in these projects.
In the day’s business, Maria Costa, Director of the Finance Division of the Office of Programme Planning, Finance and Budget in the Department of Management Strategy, Policy and Compliance, in one intervention introduced the seventh progress report on the seismic mitigation retrofit and life-cycle replacements project at ESCAP premises in Bangkok; the Secretary-General’s fifth progress report on the renovation of the North Building at ECLAC in Santiago, Chile and the sixth progress report on the replacement of office blocks A–J at the United Nations Office at Nairobi. She attributed the $1.24 million increase in ESCAP’s cost and the revised $19.17 million overall cost of ECLAC renovation as against the initial $14.33 estimate to COVID-19 pandemic-related disruptions. For the replacement work in Nairobi, however, 31 December 2024 and 31 December 2025 are unchanged as the respective substantial and final completion dates.
Jakub Chmielewski, Vice-Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) presented the Advisory Committee’s eponymous reports. On 2024 resources for the three projects, the Advisory Committee recommends the appropriation of $1.24 million for ESCAP project; $10.09 million for the North Building project at ECLAC; and $15.04 million for the master plan for the Gigiri complex of the UN Office at Nairobi.
Construction and Property Management
MARIA COSTA, Director of the Finance Division of the Office of Programme Planning, Finance and Budget in the Department of Management Strategy, Policy and Compliance, introduced the seventh progress report on the seismic mitigation retrofit and life-cycle replacements project at the Economic and Social Commission for Asia and the Pacific (ESCAP) premises in Bangkok (document A/78/346), which outlines advances and activities, including on construction, the removal of hazardous materials, change management and business readiness in anticipation of the move of staff to the renovated spaces. Phase 1 of the construction is progressing, albeit with challenges, which include late impacts of the COVID-19 pandemic on the international supply chain, human resource shortages and unforeseen site conditions.
ESCAP responded immediately by engaging with the general contractor’s most senior management to ensure that appropriate risk mitigation measures were in place to minimize further delays. “ESCAP will continue to do so until construction is completed. Despite these delays, phase 1 of the construction has currently exceeded 90 per cent completion and the ESCAP team remains fully dedicated to ensuring its successful completion”, she noted. The project’s construction phase now has July 2024 as its estimated completion date instead December 2023. This translates to a $1.24 million increase over the current approved $40.02 million maximum overall project cost. Recommendations for the General Assembly are captured in Section VIII (paragraph 77) of the report.
Next, she presented the fifth progress report of the Secretary-General on the progress of the renovation of the North Building at the Economic Commission for Latin America and the Caribbean (ECLAC) in Santiago, Chile (document A/78/337). The contract for the main renovation works has been signed, works commenced June 2023 and are scheduled for completion by the end of 2024. After the award of construction contracts, the project’s overall maximum is now an estimated $19.17 million, based on an 80 per cent cost confidence level, as against $14.33 million previously estimated. This increase, she explained, is on account of “the challenging local and global construction industry in a post-COVID-19 pandemic environment”. She added that the contract was signed in the Organization’s best interest to avoid any delay and cost escalation and also includes a clause on the possibility of the General Assembly not approving the full budget requested. Proposed action for the Assembly is listed in section VIII of the report.
Lastly, she introduced the sixth progress report on the replacement of office blocks A–J at the United Nations Office at Nairobi (document A/78/510), which focus on the three critical components of the project’s scope — the early works, the flexible workplace strategies, and the construction of new buildings. Highlighting achievements in the intervening period, she cited the successful completion of the construction of a new annex, the completion of the renovation of the publishing services building, the completion of the refurbishment of blocks P and Q as a pilot for the implementation of flexible workplace strategies, the award of the contract to implement these strategies in the remaining eight blocks M–X, and the start of the renovations in blocks T, U and X.
Also completed is the award of the contract for the new office building component, which is the largest and most significant component of the project. “This final contract was awarded within budget, which is a significant milestone and has contributed to an increase in confidence that the project will be delivered within the maximum overall cost of $66.26 million approved by the General Assembly”, she stressed. Substantial and final completion dates remain 31 December 2024 and 31 December 2025 respectively. She further pointed out the signing of a service-level agreement with the Office of the United Nations High Commissioner for Refugees (UNHCR) to fund the capital investment required for two office blocks for their use in the Gigiri complex of the Office, while benefiting from some economies of scale through the blocks A-J project without impacting its overall cost. Paragraph 68 of Section VIII of the report contains the proposed recommendations for the Assembly.
JAKUB CHMIELEWSKI, Vice-Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced in one intervention the related reports of the Advisory Committee under the proposed programme budget for 2024: “Seismic mitigation retrofit and life-cycle replacements project at the Economic and Social Commission for Asia and the Pacific premises in Bangkok” (document A/78/7/Add.17); “Progress on the renovation of the North Building at the Economic Commission for Latin America and the Caribbean in Santiago” (document A/78/7/Add.14); and “Progress on the replacement of office blocks A–J at the United Nations Office at Nairobi” (document A/78/7/Add.11).
On the replacement project at ESCAP, he said the ACABQ notes the project is slated for substantial completion by July 2024, a total delay of seven months. The updated cost plan would lead to a project budget of $41.26 million, a cost overrun of $1.24 million. The ACABQ notes the slippage in the project’s completion and financial impact of the delays. It also notes ESCAP is currently managing the process of delay damages with the general contractor to arrive at mutually acceptable terms and trusts all efforts will be made to minimize the cost of delays. He underscored the administration’s and project owners’ responsibility in managing risks and noted that certain risk categories, such as owner-directed changes, could be managed more effectively to mitigate the impact on project timelines and cost. He noted measures taken to include local materials and knowledge in the project and lessons learned from the multistage procurement approach. The ACABQ also trusts that updated information on the energy reductions achieved after the project’s completion, and potential benefits of upgrades to the ESCAP Secretariat building and the policy governing rental income, will be provided.
Turning to the renovation of the North Building project at ECLAC, the ACABQ is concerned with the substantial cost increase beyond the level previously approved by the Assembly. He emphasized the Assembly’s prerogative in managing and allocating resources and that ECLAC’s signing of the construction contract under the delegation of authority framework, should not be a precedent for other construction projects. The ACABQ recommends all projects facing significant resource changes from approved budgetary levels must seek Assembly approval before continuing planned activities. The ACABQ sees merit in providing de-scoping options, with clear financial and operational implications, when presenting project proposals facing significant resource challenges.
Regarding the replacement of office blocks A–J at the United Nations Office at Nairobi, the ACABQ notes that the master plan for the Gigiri complex is unchanged and the cost remains at $66.2 million. It notes construction is on-going and the confidence level has increased to 97 per cent that the project will be completed at approximately $1.9 million under budget. The ACABQ welcomes the new service level agreement with UNHCR for funding two office buildings and one logistics building, and five additional project personnel. As described in its report on addressing the deteriorating conditions and limited capacity of the conference services facilities at the Office at Nairobi, the ACABQ welcomes that several United Nations system entities are interested in relocating some of their operations to Nairobi and looks forward to future updates.
Turning to general issues, the ACABQ is concerned by the different approaches taken by various project teams regarding the treatment of contingency. The ACABQ trusts the Secretary-General will review current contingency practices and aim to harmonize and identify any lessons learned and provide an update in future progress reports. In addition, the ACABQ trusts that a “lessons learned” document will be shared across the Secretariat and these lessons will be applied in construction projects and other future projects of the United Nations. The ACABQ trusts the Secretary-General will keep working with the host country, Member States and other potential donors to mobilize voluntary and in-kind contributions, aimed at gaining efficiencies and offsetting the project’s overall cost. Regarding 2024 resources for the three projects, the ACABQ recommends the appropriation of $1.24 million for seismic mitigation retrofit and life-cycle replacements project in ESCAP; $10.09 million for the North Building project at ECLAC; and $15.04 million for the master plan for the Gigiri complex.
RICHARD TUR DE LA CONCEPCIÓN (Cuba), speaking on behalf of the Group of 77 and China, encouraged the Secretary-General to continue taking steps to engage with the Governments of Chile, Thailand and Kenya to ensure the success of the ongoing projects in ECLAC, ESCAP and the United Nations Office at Nairobi as well as share the knowledge, best practices and applicable lessons with other UN construction projects, including on energy efficiency strategies and the enhanced use of local materials, expertise and labour. He also welcomed the coordination and oversight of the Global Asset Management Policy Service for the implementation of these projects. On the ECLAC project — expectedly the first ‘net-zero’ building in the common system — the Group notes that because the approved budget is unable to deliver the Commission’s North Building, a $4.9 million increase has escalated the project’s estimated maximum cost to $19.2 million.
The Group also acknowledges that this increase is due to unfavourable conditions such as significant price increases for materials in the project’s scope and a 530 per cent increase in freight rates from 2019 to 2022, which has added more costs to the supply chain for the project and made the available project contingency and escalation budgets insufficient to cover the updated costs. The Group anticipates discussions on the revised cost plan in order to seek its approval, which remains the prerogative of the General Assembly. “At the same time, we stress the importance of effective governance, oversight, internal control and accountability to ensure that the project will be implemented within the proposed revised budget and the established timeline,” he said. He highlighted the fact that the highest best-value-for money scoring vendor is a locally based construction company, awarded following a multistage request for proposals and the multiple proactive risk mitigation measures put in place by ECLAC in the procurement, contracting and contract execution stage.
Turning to the ESCAP project, he observed its estimated substantial completion date of July 2024 due to unforeseen circumstances, including the late impact of COVID-19 and welcomed ESCAP’s efforts, including through risk management, to minimize associated delays. He said the project must be sufficiently funded as its completion date approaches and acknowledged continuous cost control efforts. The Group is however concerned with the now less-than 5 per cent likelihood the project will be delivered within its approved $40 million budget and that with a updated project cost of $41.2 million, this is the first time ESCAP has requested more funds for the project’s completion. Noting the collaboration between ESCAP and the Office of Legal Affairs in reviewing contractual options available to close the P80-gap and managing the process of delay damages with the General Contractor to arrive at mutually acceptable terms, he said: “We recognize the rationale of the approach used by the project team as regards the confidence level and hope that every effort will be made to reduce the cost of the delays.”
On the replacement of office blocks A–J at the UN Office at Nairobi, he expressed satisfaction that the project’s three components are on track for substantial completion by the end of 2024 within the approved overall schedule, with close-out activities for completion by the end of 2025. He welcomed the increased confidence level of 97 per cent, achievements on the completion of construction and renovation works, the successful design, procurement and award of contract for the new office building component, as well as the efforts of the Office’s project management team to take proactive measures to manage risks. “The Group hopes that the Secretary-General will continue to closely monitor and mitigate project risks to ensure the delivery of the project within the scope, budget and timeline,” he said, emphasizing the need to continue collaboration with the co-located UN Office at Nairobi conference services facilities project. The Group expects implementation updates of the service level agreement with UNHCR.
MOK CHAK YONG (Singapore), speaking on behalf of the Association of Southeast Asian Nations (ASEAN), said ESCAP serves 53 Member States and nine associate members in the Asia-Pacific region, 60 per cent of which are countries in special situations. The Commission plays a key role in promoting sustainable development and ensuring countries in the region progress in line with the 2030 Agenda for Sustainable Development. “ESCAP’s seismic mitigation project is a long-term investment with safety and security as the ultimate goal,” he said, adding the project is on track for completion. The Group continues to stress the importance of good governance, effective oversight, transparency and accountability in project management. Noting the seventh audit report of the Office of International Oversight Services (OIOS), he welcomed efforts by ESCAP and the Department of Management Strategy, Policy and Compliance to implement the audit recommendations.
The Group also encourages ESCAP to keep finding innovative ways to realize budgetary savings, manage operational risks and ensure business continuity, he said. ASEAN commends the Commission’s efforts to share the lessons learnt from its joint furniture solicitation exercise with the Economic Commission for Africa (ECA), including a presentation made in May at the annual conference of the Inter-Agency Network of Facilities Managers. He is pleased that ESCAP will meet or exceed the project goal to reduce energy consumption by 16 to 18 per cent through the energy-saving and energy-efficient design features. ASEAN underscores the importance of including local knowledge, technology, capacity and locally sourced and manufactured materials in construction projects. ESCAP’s collaboration with host country experts and authorities to ensure the project’s success was exceptional. The Commission established robust partnerships with local government agencies and academic institutions to develop engineering solutions to withstand seismic events, manage and remove hazardous materials, and streamline construction processes, he noted.
JOSÉ ANTONIO GONZÁLEZ SESE (Chile), also speaking on behalf of Argentina, Bolivia, Brazil, Colombia, Costa Rica, Cuba, Ecuador, El Salvador, Guatemala, Guyana, Honduras, Mexico, Panama, Paraguay, Peru, Dominican Republic, Uruguay and Venezuela, recalled his country’s land donations in 1960 and 1997 for the construction and expansion respectively of ECLAC’s complex. In-kind contributions provided by his Government “have been crucial for the validation of the technical and operational definitions of this project and how the works will be executed to achieve the goal of a net-zero building”. He encouraged ECLAC to continue working closely with the host country and local authorities during the project’s implementation. He said the North Building renovation will provide the Organization with a high level of energy efficiency, thereby reducing greenhouse emissions and achieving savings in operating costs. He welcomed ECLAC’s successful carrying out of a request-for-proposals in several phases, which constitutes a new approach in the Secretariat, and made it possible to award the contract for the main renovation works to a local company and to sign the contract in May — a key step in avoiding further delays and cost increments. Noting the current 12 per cent total progress level of the work — more than expected — and the completion of the building’s dismantling and demolition phase, he expressed optimism that the work will be completed on schedule.
Given the stage of the project, reducing the scope of any relevant component is not feasible and would impair its functionality and impact ECLAC’s net-zero objective along with its sustainability strategy, energy efficiency expectations, compliance with safety standards and guarantees of staff well-being, guarantees of compliance with required codes, such as local seismic codes, fire protection and international building codes, he said. Moreover, doing so could result in an eventual increase in operating costs and the total cost of ownership of the building. “It should be noted that despite the difficult economic situation around the world, this project is progressing smoothly to become a milestone of sustainable transformation, effectively embodying the SDG agenda, as mandated by the United Nations Secretariat”, he said. The Group, in alignment with the ACABQ, supports the Secretary-General's proposal to approve the estimated $19.17 million revised overall maximum cost of the project and the maintenance of the temporary post of Procurement Officer (P3) throughout 2024, and to allocate $10.13 million for the project in 2024.
LEMLEM FISEHA MINALE (Ethiopia), speaking on behalf of the African Group, said the United Nations Office at Nairobi plays an important role within the United Nations system as global headquarters of the United Nations Environment Programme (UNEP) and the United Nations Human Settlements Programme (UN-HABITAT) while being home to thousands of national and international UN staff. The project’s successful implementation is critical to provide a conducive work environment and enhance productivity. She noted that despite some delays, the project’s three components remain on track for substantial completion by the end of 2024, with final completion expected by the end of 2025. The African Group reiterates the importance of effective governance, oversight and accountability mechanisms. The regular coordination meetings provided by the Global Asset Management Policy Service help achieve synergies and alignment with best practices and lessons learned from other capital projects.
On project management, the Group acknowledges recruitment of most positions approved by the Assembly for the dedicated project team and project support staff has ended, including the replacement of the two staff who left in late 2022. The Group will seek more information on the cost-sharing arrangement proposed between the Office at Nairobi and ECLAC for the project coordinator post. Regarding risk management, the Group notes the sixth and most recent Monte Carlo assessment carried out in June 2023. She commended the efforts of the project’s management team and the Global Asset Management Policy Service on increasing the confidence level to 97 per cent. “We trust that the Secretary-General will continue to closely monitor and mitigate project risks for timely delivery of the project within the approved scope and budget,” she added. The Group reiterates its long-standing position to ensure the use of locally sourced and manufactured materials, as well as local labour and expertise for these projects.
SURAT SUWANNIKKHA (Thailand), aligning himself with the Group of 77 and ASEAN, said that as host country of ESCAP since 1949, Thailand has seen first-hand the importance of the global-regional partnership and the Commission’s tangible contributions to economic and social development in Asia and Pacific. ESCAP’s work is especially important at this crucial moment as countries in the region strive to accelerate implementation of the Global Goals. “This is particularly pertinent as 60 per cent of ESCAP members are countries in special situations,” he said. His delegation commended the emphasis that ESCAP gives to local knowledge by working closely with host country government agencies and academic institutions while sourcing local materials wherever possible. This benefits the project’s risk management and local ownership, he added.
Thailand will continue to create more opportunities for this partnership, such as the United Nations procurement seminar that the Government hosted with the UN Procurement Division and ESCAP in May, he said. It was attended by more than 100 vendors from Thailand and other countries. The Commission seismic mitigation project is a story of resilience and innovation and its best practices should be shared with other UN construction projects and entities, he said. This should include information regarding project management during a pandemic, awareness to accessibility, reduced environmental impact and cost savings through joint procurement with the ECA. “Institutional memory matters,” he added.